Causal Inference in Accounting Research

64 Pages Posted: 9 Feb 2016 Last revised: 29 Jun 2016

See all articles by Ian D. Gow

Ian D. Gow

University of Melbourne; University of Melbourne - Department of Accounting and Business Information Systems

David F. Larcker

Stanford University - Graduate School of Business; European Corporate Governance Institute (ECGI); Stanford University - Arthur & Toni Rembe Rock Center for Corporate Governance

Peter C. Reiss

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2016

Abstract

This paper examines the approaches accounting researchers use to draw causal inferences using observational (or non-experimental) data. The vast majority of accounting research papers draw causal inferences notwithstanding the well-known difficulties in doing so. While some recent papers seek to use quasi-experimental methods to improve causal inferences, these methods also make strong assumptions that are not always fully appreciated. We believe that accounting research would benefit from: more in-depth descriptive research, including a greater focus on the study of causal mechanisms (or causal pathways); increased emphasis on structural modeling of the phenomena of interest. We argue these changes offer a practical path forward for rigorous accounting research.

Keywords: accounting research, causal inferences, study of causal mechanisms, study of causal pathways, econometrics

JEL Classification: C20, C30, M20, M40

Suggested Citation

Gow, Ian D. and Larcker, David F. and Reiss, Peter C., Causal Inference in Accounting Research (May 2016). Journal of Accounting Research, Vol. 54, No. 2, 2016, Rock Center for Corporate Governance at Stanford University Working Paper No. 217, Stanford University Graduate School of Business Research Paper No. 16-16, Available at SSRN: https://ssrn.com/abstract=2729565 or http://dx.doi.org/10.2139/ssrn.2729565

Ian D. Gow (Contact Author)

University of Melbourne ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

University of Melbourne - Department of Accounting and Business Information Systems ( email )

Victoria
Melbourne, Victoria 3010 3010
Australia

David F. Larcker

Stanford University - Graduate School of Business ( email )

Graduate School of Business
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Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

European Corporate Governance Institute (ECGI) ( email )

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Belgium

Stanford University - Arthur & Toni Rembe Rock Center for Corporate Governance ( email )

Crown Quadrangle 559 Nathan Ab
Stanford, CA 94305-8610
United States

Peter C. Reiss

Stanford Graduate School of Business ( email )

Stanford, CA 94305-5015
United States
650-725 2759 (Phone)
650-725-7979 (Fax)

HOME PAGE: http://www.stanford.edu/~preiss

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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